Revenue will increase by between 1.1 billion pounds ($1.7
billion) and 1.7 billion pounds in the three years through March
2014, the London-based retailer said today. That’s down from a
November 2010 forecast for growth of 1.5 billion pounds to 2.5
billion pounds. Analysts had estimated sales of 10.8 billion
pounds in fiscal 2014, according to the average of 21 estimates
compiled by Bloomberg, compared with 9.7 billion pounds in 2011.

The reduction in the goal “is not as bad as feared,”
Caroline Gulliver, an analyst at Execution Noble in London, said
by phone. She has a buy recommendation on the stock.

Marks & Spencer rose as much as 2 percent in London trading
after the retailer also reported profit that beat estimates.
Chief Executive Officer Marc Bolland plans to ramp up the
company’s online and international presence to compensate for
U.K. conditions that he predicts will be tougher than forecast.
Marks & Spencer said today it will invest 200 million pounds
less than planned expanding its U.K. store space over the next
two years, with a focus on its small-format Simply Food outlets.

“The U.K. is not completely delivering,” because of the
slowing economy, Bolland said on a conference call. The reduced
sales target “is something the market has already realized.”

The shares were up 0.2 percent at 339 pence as of 10:04
a.m. in London, extending their gain this year to 9 percent.

Festive Discounts

Underlying pretax profit fell 1.2 percent to 705.9 million
pounds in the year through March, the London-based company said,
the first decline in three years. That beat the 693.4 million-pound average estimate of 21 analysts compiled by Bloomberg.

A “challenging environment” caused the retailer to offer
discounts of as much as 25 percent off knitwear at its 700
outlets over the peak Christmas period to match competitors.

U.K. retail sales fell the most in more than a year last
month as poor weather and consumer caution on spending curbed
demand at stores, according to the British Retail Consortium.

“It’s been a tough start” to the quarter, Bolland said.

The retailer said it plans to increase U.K. selling space
by 3 percent this fiscal year, reducing to about 2.5 percent the
following year and a further reduction thereafter. It had
previously expected to increase domestic space by about 3
percent a year through 2015.

International Expansion

“This is partly as a response to the popularity of online
shopping, but in our view reflects lower levels of confidence,”
Philip Dorgan, an analyst at Panmure Gordon, said in an e-mailed
note. He has a hold recommendation on the shares.

Spending on international stores will increase by 50
million pounds in the three years through March 2014, the
retailer said, with four new leases signed in Paris.

About 100 new international stores are planned this year,
including in India and China, and M&S will have 10 different
language-specific websites by the year-end.

Tests of new concepts such as in-store delicatessens and
more distinct branding for clothing ranges such as the Limited
Collection and Per Una have increased sales by 2.5 percent in
pilot stores. The retailer has started the next phase of the
rollout with new home departments including the Conran and
Marcel Wanders range, as well as a new beauty department.

“Getting an uplift of 2.5 percent gives us a lot of
confidence,” Bolland said on the call.